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Mexico and the Pacific Basin:
Facing the New World Challenges

H.E. Mr. Carlos Salinas de Gortari
President of the United Mexican States

A Presentation Made at the United Nations University
on 21 December 1993
Tokyo, Japan

Let me first of all thank you for the opportunity given to me to say a few words about the main trends which seem to define the world changes as well as the major role to be played during the remaining years of the twentieth century by the Pacific Basin. I will also briefly touch upon the deep process of transformation in my country and upon its active involvement in the main changes the world is going through today.

Although inconclusive and uncertain, the political and economic definitions of the last few years have already given us a profile of the complex world which will be ours during the beginning of the next century. At the political level, now that the post war order has disappeared, we have witnessed the fall of the iron as well as smoke curtains which would not let us assess the complexity underlying the delicate nuclear balance. In brief, we do witness the way the end of the cold war has given way not to a new world order but to a rearrangement of various forces. In some parts of the world, this rearrangement has given way to intolerance, cruelty and war. However, numerous nations are searching for a sound system, a system which recognizes interdependence and confirms the cultural diversity within the framework of a new international law. It is in the progress of this ideal we find the main political challenges confronting us today.

At the economic level, globalization puts pressure on the need to increase productivity and generates a series of intricate connections which nobody can escape from. The recovery of the main world economies is unfortunately very slow and makes the reaching of acceptable levels of employment more difficult. As it is the case for all economies, this slow recovery does stimulate strong migration flows which, during the last few years of the twentieth century, could become as in the past, a grave source of concern. This is the reason why it is indispensable to set up mechanisms which allow the domestic economies to solve their problems without the need to surmount external obstacles. One way to approach the future would be to open the markets and, by doing so, to promote a major exchange of goods as well as a decrease in the number of people who leave their countries for purely economic reasons. This is no doubt one of the great economic challenges of our times. Those challenges demand from the international community that decisive actions be taken. Faced with a political challenge, the end of the cold war, the new regional players and the danger of local conflicts whose levels of violence are unprecedented require us to look into the multilateral bodies in order to ensure their relevance and usefulness by the end of the twentieth century. We must reach a consensus in order to prepare for a harmonious coexistence in a more than ever different political world. Our world, as pluralistic and diverse as it is, needs to be better represented within the multilateral political bodies. The changes needed in the United Nations are of vital importance. Indeed, it is in the UN that new regional balances must express themselves not only in their structure but also in their operations, especially with regard to the veto system, the Security Council membership, and the stronger role to be played by the General Assembly.

Faced with a gigantic economic challenge, the world has taken a historical step. The successful completion of the Uruguay Round gives us the clear trade rules essential for promoting exchanges, for making trade and investment more dynamic, and, by doing so, for increasing growth potential among the nations. Aware of the need to open its market, as is now the case, Mexico sees the success of the Uruguay Round as an opportunity meeting its unilateral opening which is compatible with the free trade agreements and treaties my country has already signed and which supports the efforts made to give the agricultural sector and the ecological conservation of Mexico a new dynamism.

Together with the fight to set up new mechanisms aiming at promoting the harmonious coexistence among nations and to open the markets, we must take up another challenge, that of quality and even morality. There is no doubt that the main factor, because without it the world would not be able to survive, is the protection and conservation of the environment as well as the need to promote bio-diversity and growth. True, it is extremely difficult to protect the environment when the majority is poor, but it is clearly preposterous that development should be at the expense of the survival of our common natural heritage. This is the reason why we must reconcile science and conscience and reconcile both of those with efficient social justice strategies. Otherwise we run the risk to transform the environment into something that we would never again be able to recover. The changes to be made in the international organizations on the one hand, and the increase in a truly free trade system on the other, demand that the environment be protected. But that should not serve as an excuse to weaken sovereignties. On the contrary, any efficient measure to be taken in this field and other fields of international concern will require exceptional efforts of political consensus which would allow us to build a system of international and common responsibility based on mutual respect.

What has been the answer of Mexico to those changes and challenges? What is our strategy to become a stronger nation and to ensure our effective involvement in what I would describe as a new world to come? What are the main elements of our development policy?

First, we improved both collective and individual freedoms, we reestablished the legal relationships of the state with the churches, we modernized the electoral system, and we created institutions such as the ombudsman in order to protect human rights all over the country.

Second, in the economic arena, we succeeded in controlling inflation, and rid ourselves of the macro-economic instability. Furthermore, we are restructuring our economy at the corporate level to increase our micro-economic productivity while imposing strict environmental rules.

Third, and this is a priority, we are facing inequality with a strong programme against extreme poverty, a programme which will allow us to better allocate the benefits of our productive transformation. By doing so, our economic policy has indeed become part of a broad social strategy through which we are building a political consensus, creating more opportunities for the poor and protecting the ecological commons which we want to give our children.

The cautious management of public finances as well as the privatiza-tion of hundreds of state companies (their number has been reduced to practically one-sixth of the number we had ten years ago) has allowed us to eliminate the budget deficits and to reduce the public sector debt which is now only one-fifth of the GDP. Those indicators explain the decrease in the most regressive tax, that is inflation, to less than ten per cent. Six years ago, our inflation rate was approxi-mately 200 per cent. At the end of 1993, it will be approximately only eight per cent. The good management of public finance as well as the continuing fight against inflation have been conceived in Mexico not only in terms of stability and economic restructuring but also as vital instruments of our social justice strategy.

The deregulation process and the trade opening have given us the opportunity to stimulate productive activities and to raise more than 34 billion dollars of foreign investment in the last five years.

Export promotion has been very successful, especially in the manufacturing field, whose rate has risen more than 10 per cent between 1991 and 1992. In Mexico, productivity is going up, and thus giving way to a slight but strong increase in real wages.

The transformation in Mexico, aimed at increasing its capacity to assume its basic responsibilities, is taking place in two main areas: social expenditures and the environment, in order to reach a sustained and sustainable development. As for the social expendi-tures, they have increased by 85 per cent over the last five years, and their share of public expenditures has risen from 30 per cent to more than 50 per cent as well as to 10 per cent of the GDP. This is why today an additional 13.5 million Mexicans have access to drinking water, 11.5 million to sanitation, and 16 million to electricity. In the field of the environment, we are efficiently following some of the most rigorous ecological legislation in the world and we have even increased the number of natural preserves for a total today of some 16 million acres.

However, more impressive than the figures, is the way in which we have reached our objectives. They do not result from centralized and paternalistic decisions forced upon the population. On the contrary, they have been made possible through a pattern of shared responsibil-ities in which the state allocates resources to the initiatives taken by the communities themselves. Communities, assembled in social com-mittees, are the ones that design, implement, and supervise the work. This is the reason why we gave this strategy the name of Solidarity.

In the context of our social strategy, education has been given priority. Throughout the twentieth century, one of the most important lessons will no doubt be that education, basic education, helps forge national unity and strengthen social cohesion.

Education promotes a more equitable allocation of revenue as well as more rational consumption patterns. Education promotes human rights, respect and makes social adjustment to technological advances easier. Furthermore, a good education allows better paid jobs, a higher industrial and agricultural productivity while reducing fertility and child mortality rates, improving the overall food and health status and encouraging a more positive civic behaviour.

This is why we in Mexico, decentralized the administrative functions related to education, updated the curriculum and textbook contents, made basic education compulsory for all children up to the age of nine and increased national expenditures in the field of education to reach today 5.7 per cent of our GDP-a record for the country. In the field of education and vocational training, we try to determine the future competitiveness of the country. Look at Japan and you will see that it now has one of the best basic education systems in the world.

Externally, and from our vantage geographical situation, we have made diversification the basic principle of our trade policy. Mexico has already concluded a free trade treaty with Chile, the first of its kind between two countries of Latin America. In addition, Mexico has already concluded talks for the soon to be implemented agreement of the same kind with Venezuela and Colombia as well as in the near future with other countries of Central and South America. With the European Union, we have an economic agreement that has allowed us to increase investment in Mexico by 50 per cent and bilateral trade by 100 per cent in only five years. Mexico has also been invited to become a member of OECD, a body where Japan is playing a major role.

With the United States and Canada we have concluded a trilateral North American Free Trade Agreement which, in only a few days, will become reality. Through it, we are trying to increase our economy's competitiveness and to create new employment. Mexico's population is 85 million, and it increases annually by an additional two million. It is thus essential for us to promote growth and development.

NAFTA has four main features. First, it is not an exclusive or closed treaty and it will never become an economic fortress. Mexico has made sure that it will be able to strengthen its trade relations with other regions, in particular with the Asia-Pacific region and Japan. NAFTA will not be an exclusive market. All treaties concluded by Mexico give other countries the opportunity to adhere to them and they have been conceived as a dynamic mechanism open to trade with other regions. Second, NAFTA does not discriminate against investment being made in Mexico regardless of its origin. Those companies, and there are many in Japan, will be able to benefit from the Treaty using the rule of origin determined by it. Third, the Treaty gives clearly defined rules for access to an enlarged market while protecting investment. Fourth, the Treaty is a broad treaty that also includes the defense of the workers rights and the protection of the environment. It is a new kind of treaty. We have said repeatedly that we want productive as well as technologically advanced and environmentally conscious investment.

In a context marked by economic globalization and the setting up of major development access, the notion of power will emphasize less and less the nation and more and more the region. With 2,300 million people, that is 45 per cent of world production, 50 per cent of world trade, 20 per cent of world oil reserves, the main financial reserves and the most advanced technological processes, the Pacific Basin is and will be economically the most dynamic region of the world.

This is why, for Mexico, the Asia-Pacific region is the main attraction for our policy of strategic diversification. There is no doubt that we still have a long way to go. Five years ago, Mexico's trade with this region was only 10 per cent of its total. Since then, we have redirected our policy towards Asian countries. Bilaterally, we are trying to find alternatives of economic and technological complementarity by modernizing our economy, opening our trade and giving ample opportunities for productive investment. Concerning our bilateral relationship with Japan, we have witnessed an increase in our trade of approximately 60 per cent in the last five years. Similarly, Japan has increased its financial and technical support in order for Mexico, in particular its capital Mexico City, to promote productive projects and ecological programmes. The opportunities offered by a relationship such as the one existing between Mexico and Japan could become the rule and largely contribute to a world favouring free and equitable trade without protectionism, without unilateral measures, a world whose two main features would be transparency and fairness.

Concerning our multilateral relations, Mexico has increased its involvement in the regional processes of integration and in the broader schemes of cooperation with the Pacific region. Mexico has been for quite a while, a member of two Pacific Basin initiatives, that is the Pacific Basin Economic Council and the Pacific Council for Economic Cooperation. Last month, Mexico became a member of APEC and it also takes part in the Association of South East Asian Nations as a partner in the fields of trade, investment and development cooperation. Let me stress the recent approval given to the entry of Mexico into APEC, a mechanism through which we will be able to give more consistency to what has been done by Mexico inside the above mentioned bodies. For Mexico, APEC is the main forum through which my country will be able to promote trade and investment in what will be the main economic area of the twenty-first century. More than 8,000 kilometers of coastal zones along the Pacific as well as our strategic position between the developed North of the continent and Latin America will allow us to speak with one voice and thus give the Pacific region an intercontinental dimension.

Furthermore, the very close trade relationship Mexico has with the United States of America and Canada, both countries also members of APEC, demand that Mexico be an active player in this organization to make sure that the Pacific Basin be not only an Asian organization but also an intercontinental one and to make sure that such basin becomes the most important open and fair economic area of the twenty-first century.

Japan has shown that it is vital to share production with other nations in order to increase competitiveness. Today Japan's produc-tion reaches 35 per cent of its exports. With NAFTA and Mexico's membership in APEC, our trade relationship with Japan can be strengthened and both our countries can benefit from it. Mexico is not only a nation of the Americas but also a nation of the Pacific region. This is the reason why it is vital for Mexico to enlarge its economic and cultural links with countries as magnificent as Japan.

We are witnessing today major and swift changes. Economic and social perspectives in the Pacific Basin are consequently remarkable. This basin is already the main pillar of world development and its gateway to the next century, with all its challenges and opportunities.

This is why Mexico is more than ever determined to take part in this region of the future and to make sure, through its efforts, that the Pacific Basin becomes a growth and technological progress engine, which will lead to global development, that is a clean, a fair, and an opportunity generating development for each and all of us. In this great University of the United Nations, there is a constant dialogue between academics and scholars from all over the world, who study the pressing problems of humanity on the basis of a dialogue of mutual respect, and of international friendship. Those are the values we Mexicans are fighting for, values my visit to Japan is trying to put emphasis on.

One hundred and five years ago, on 30 November, Mexico and Japan established diplomatic and friendly relations. Since the ancient times, Japan has always been concerned with nature; nature is synonymous of friendship and those who care for friendship care about the future. As a poet of the great Aztec civilization once said: "Protect the earth, this is why, I have come here to make friends".

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